2015 (2) TMI 970 - AT - Service Tax

Helicopter Chartering service - Supply of tangible Goods for Use services or Air Transport of Passengers services - Held that - We have carefully considered the rival submissions. In the present case the appellant has been discharging service tax liability under the category of 'Air Transport of Passenger' since 2010. Whether operating helicopter on charter basis for transport of passengers would merit classification under 'Air Transport of Passenger Service' or under the category of 'Supply of Tangible Goods for Use' is a complicated and contentious issue. There can be arguments for classification under either of the category with equal force. Therefore, considering the fact that the appellant has paid a sum of about ₹ 37 crores as against the demand of about ₹ 67 crores, we consider the same to be sufficient for the purpose of hearing of the appeal. - Stay granted.

Summary

Issues:
Classification of service for service tax liability - Air Transport of Passenger vs. Supply of Tangible Goods for Use

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI concerns the classification of service for service tax liability by M/s. Global Vectra Helicorp Ltd. The Commissioner of Service Tax, Mumbai had issued three show cause notices demanding significant service tax amounts for different periods. The department contended that the activity fell under "Supply of tangible Goods for Use," while the appellant argued that they were discharging service tax liability under the category of 'Air Transport of Passenger' since 2010. The appellant provided details of the contracts with clients, emphasizing the transport of passengers by aircraft on a charter basis. They also highlighted their compliance with DGCA regulations and the Non-Schedule Operator Permit (NSOP) they held. The appellant had paid a substantial sum against the total demand and requested a stay.

The Revenue, represented by the Commissioner (AR), maintained that the service provided by the appellant should be classified under 'Supply of Tangible Goods for Use' based on a Circular issued by CBEC and a previous court decision regarding a similar case involving off-shore activities. The Revenue argued that chartering helicopters should be considered as supplying tangible goods for use, similar to the ruling in the mentioned court case. They opposed the appellant's request for a stay and urged the Tribunal to enforce the terms against the appellant.

After considering the arguments, the Tribunal acknowledged the complexity and contentious nature of the issue regarding the classification of the service provided by the appellant. Recognizing the substantial payment made by the appellant against the demand, the Tribunal deemed it sufficient for the appeal hearing. Given the significant revenue involved, the Tribunal scheduled the case for final hearing on a specific date. As a result, the Tribunal granted a waiver of pre-deposit for the balance amount of dues adjudged against the appellant and stayed the recovery during the appeal's pendency.